3.0 The annual cost of Assets and Facilities Services

The revenue and lifecycle costs associated with asset ownership
and use represent a considerable proportion of NHSScotland budgets.
This section of the report provides a summary of the annual cost
(based on 2013/14 Cost Book data) of asset ownership and facilities
management services. Whilst this section provides some comparative
information on annual changes, more detailed information on
performance trends was described earlier in
Section
2.4.

3.1Property Assets and Facilities Services - Annual
Costs

There are significant annual revenue costs that are directly
associated with property asset ownership including:

Property Maintenance - regular day to day maintenance
including revenue expenditure on backlog but excluding major
capital expenditure on upgrading/refurbishment and backlog
works)

Energy

PFI
Facilities Management Costs (primarily Hard
FM)

Rent and Rates

Cleaning

There are also a range of facilities management services costs
that are closely associated with property asset ownership
including:

Catering

Portering

Laundry and linen

Waste disposal

The annual property and facilities services costs for the last
three years, and which are within the scope of the
SAFR,
are shown in the table that follows (excludes Special Boards and
the non-hospital estate).

Annual Property Asset and Facilities Services
Expenditure (£)

2011/12

2012/13

2013/14

Percentage Change 12/13 to 13/14

Property Maintenance (capital and revenue
costs)

117,679,791

123,457,925

119,102,656

-4%

Cleaning

117,425,095

119,750,871

122,115,049

2%

PFI
Facilities Management Costs

106,949,026

117,745,007

115,931,448

-2%

Catering

81,039,194

84,888,978

85,620,045

1%

Energy

89,688,057

104,689,012

105,294,975

1%

Rent

9,028,816

14,649,596

19,916,172

36%

Rates

46,071,140

50,919,886

43,846,693

-14%

Portering

47,532,728

48,637,007

50,262,304

3%

Laundry and linen

33,566,916

32,120,687

32,196,777

0%

Waste Disposal

10,779,203

11,829,875

11,837,003

0%

Total

659,759,966

708,688,844

706,123,122

-0.4%

Annual Change

7.4%

-0.4%

Note: The above table excludes depreciation on property asset;
costs associated with Community and Family Health Services, and
energy costs exclude costs associated with environmental taxes and
levies e.g.
EUETS Payments.
Further details relating to energy costs are provided in
Annex
C.

There has been a reduction in overall expenditure from last year
of 0.4%, with only a slight increase in expenditure for cleaning,
catering, energy, rent and portering.

Previous work on
SAFR
has identified that these property assets and facilities services
costs are primarily (but not exclusively) driven by building size
(volume/area) and patient activity (as measured by consumer weeks).
The change in these primary cost drivers, and the number of
hospitals, is shown in the table that follows.

2012/13

2013/14

Percentage Change
2012/13 to 2013/14

Number of hospitals

228

220

-3.5%

Building Area used for measuring cleaning
costs (sq.m)

2,974,584

2,882,805

-3.1%

Consumer weeks

1,016,582

981,595

-3.4%

Annual Property Asset and Facilities
Services Costs

708,688,844

706,123,122

-0.4%

The table shows that small decrease in expenditure on assets and
facilities has been at a time when the property assets has been
decreasing in terms of both the number of hospitals, the hospital
building size (area) and reduced inpatient activity (consumer
weeks). However, it should be recognised that whilst inpatient
activity (as measured by consumer weeks) has reduced there has been
corresponding increases in the number of patients treated as
outpatients or on a day case basis.

3.2Vehicles - Annual Costs

NHSScotland's estimated annual expenditure on its vehicles
assets, as indicated through
NHS Board
information returns, is shown in the table below.

Annual Expenditure on Vehicle Assets

Description

£

% of Total

No. of Vehicles

Average per Vehicle

Insurance & accident costs (net
cost)

£5.6m

10.64%

10,151

£555

Fuel costs

£13.2m

24.83%

10,151

£1,296

Maintenance & servicing costs -

£7.88m

14.86%

1,932

£4,078

owned vehicles

Leased vehicle costs

£5.48m

10.34%

2,516

£2,179

(including maintenance)

Hired vehicle costs

£1.14m

2.15%

155

£7,350

Staff car scheme lease costs

£19.70m

37.18%

5,548

£3,552

(including maintenance & mileage claims)

Staff contribution towards private use

-£10.45m

-

5,548

(£1,884)

Total Net Costs 2015

£42.55m

100%

10,151

£4,191

Total Net Costs 2014

£36.44

£3,341

Note: excludes capital charges and depreciation on owned
fleet.

In addition to the above, many NHSScotland staff use their
private vehicles for official business and claim fuel and running
costs of circa £26m through expenses claims.

The annual change in total expenditure on vehicle assets
includes lower insurance and staff car scheme costs but higher
maintenance costs (mainly due to better information returned on
this cost indicator).

The Transport & Fleet Management Review is continuing to
look at ways in which improvements can be made to the efficiency
and effectiveness of this fleet aimed at reducing these operational
costs (see
Annex
G for further details).

3.3Medical Equipment - Annual Costs

Medical equipment use requires operational (revenue) costs for
associated consumables and accessories, for routine scheduled
maintenance and for breakdown maintenance. The survey explored
these operational costs that, together with the acquisition and
installation costs, form the total cost of ownership (
COO) of the equipment.
Consumable and accessory costs are typically charged to individual
departments and no central records will cover all these costs. In
most cases maintenance costs (scheduled and unscheduled) are easier
to identify. Maintenance is provided through a combination of
in-house staff and external service suppliers, the later often
through service contracts. Efforts are being made through robust
negotiations to fix maintenance costs, in some cases for up to 10
years, to reduce the total cost of ownership of medical devices.
The annual maintenance expenditures reported by Boards is shown in
the table that follows.

Cost of in-house teams responsible for
management of medical equipment

9,517,198

12,537,847

21%

All other revenue based expenditure on
medical equipment (excluding consumables &
accessories)

5,446,755

7,792,235

13%

TOTAL ANNUAL EXPENDITURE ON MEDICAL
EQUIPMENT:

55,452,110

59,642,121

100%

Annual changes in the above costs include a changing operational
need for maintenance, better reporting of costs, and the impact on
annual inflation and salary increases.

As with property assets, there is a need to balance investment
between ongoing annual maintenance of medical equipment, investment
in its lifecycle replacement and investment in new innovative
developments that advance the cost effectiveness of health care,
including the ability to provide health care in the community.
These advances, some facilitated by integration with information
and communication technology (
ICT),
offer patient benefits including improved patient care, improved
quality of life for patients, care in the community, and for
imaging equipment clearer sharper images with reduced radiation
doses. Staff benefit from the improved equipment functionality,
improved reliability, and ease of use as manufacturers respond to
standards on ergonomics. As equipment life is relatively short
(often less than 15 years) the level of maintenance needs to be
sufficient to ensure its continued safety, availability and
effectiveness within that period whilst accepting that other
considerations, such as technical and clinical obsolescence, can
influence the need to replace equipment earlier than planned.

3.4IM&T - Annual Costs

The IM&T survey covering the base date of 2011/12 remains
the most up to date national information available on the annual
cost of IM&T assets. This identified that the overall level of
expenditure by NHSScotland on IM&T in 2011/12 was
£236.5m. Of this total, £213m was incurred on
expenditure items of a revenue nature, with £23.5m incurred
on capital expenditure. An analysis of the revenue expenditure is
shown in the chart below.

The total revenue expenditure of £213m is split as
follows:

£57.5m (27%) of non-recurring expenditure by
NHS Boards to
support national systems and deliver eHealth strategic
priorities.

£91.5m (43%) of revenue expenditure by
NHS
Boards.

£53m (25%) of revenue expenditure by Special Health
Boards.

£11m (5%) expenditure by the Scottish Government
eHealth Division.

3.5Summary of Total Annual Asset and Facilities
Costs

The chart below provides an analysis of the combined total asset
and facilities annual expenditure that has been described earlier.
The combined expenditure of £1.022 billion is a small
increase of less than 1% on the expenditure reported in the 2014
SAFR.